NSDL gets SEBI’s nod for IPO

National Securities Depository (NSDL) initial public offering (IPO) has been approved by the Securities and Exchange Board of India (SEBI) more than a year after the depository filed the offer document. 

On September 30, the market regulator released its final comments regarding the draft red herring prospectus (DRHP), which was submitted in July 2023. Between August and December of last year, NSDL’s DRHP was placed on hold, which also caused a delay in getting the final approval.

Six shareholders of NSDL, namely the National Stock Exchange (NSE), IDBI Bank, HDFC Bank, Union Bank of India, SBI, and Government of India (SUUTI), will be paring their holdings in the company’s inaugural share sale, which will be conducted as an offer for sale only.

Currently, NSE owns a 24% stake in NSDL, with IDBI being the largest shareholder with a 26% stake. Meanwhile, shares of Central Depository Services (CDSL), India’s only other depository, went up 0.5% to Rs 1,375, valuing the company at Rs 28,738 crore.

The NSDL IPO is important because there’s a rule that says no one company can own more than 15% of any market infrastructure institution. These rules were set in 2018, and companies were given five years to lower their stakes. This deadline ended on October 3, 2023. NSE asked SEBI for more time since NSDL’s IPO was delayed.

SEBI gave the extension on October 6, 2023, but stated that NSE’s voting rights for shares above 15% would be frozen until they sold the excess shares. Last year, BSE also sold nearly 5% of its shares in CDSL to follow these rules.

Market experts say NSDL may need to update its financial information in the draft prospectus since the approval process took so long.